GM tells Trump administration tariffs could force downsizing, less investments

by admin July 1, 2018 at 12:58 am

GM said threatened tariffs “could delay breakthrough technologies and threaten U.S. leadership in the next generation of automotive technology,” Photo credit: Joe Wilssens

UPDATED: 6/29/18 3:31 pm ET – corrected

Editor’s note: Buick imports the Envision from China. The name of the vehicle was incorrect in an early version of this story. 

WASHINGTON — General Motors on Friday said it could shrink at home, jeopardizing its ability to invest in technologies such as autonomous and electric vehicles, if tariffs on imported autos and components are imposed.

In comments to the Department of Commerce, which is investigating whether auto tariffs of up to 25 percent are justified to preserve domestic industrial capacity in the name of national security, GM said U.S. tariffs and countermeasures from trading partners would undermine its global competitiveness. The potential burden is made worse when combined with the impact of recent steel and aluminum tariffs, as well as back-and-forth tariffs between the U.S. and China related to a dispute over improper technology transfers.

“If import tariffs on automobiles are not tailored to specifically advance the objectives of the economic and national security goals of the United States, increased import tariffs could lead to a smaller GM, a reduced presence at home and abroad for this iconic American company, and risk less — not more — U.S. jobs,” GM said.

The automaker warned that “steep tariffs on vehicle and auto component imports” risks undermining its competitiveness against foreign automakers — particularly in lower wage countries.

“The penalties we could incur from tariffs and increased costs will be detrimental to the future industrial strength and readiness of manufacturing operations in the United States, and could lead to negative consequences for our company and U.S. economic security,” it said.

Automakers have been unusually blunt in pushing back against the national security investigation and separate threats of tariffs directed at Europe after taking more conciliatory tones in previous debates over the steel and aluminum tariffs and the renegotiation of NAFTA.

Tariffs will raise the cost of building vehicles, leading to reduced vehicle sales, and threatening jobs at GM plants and suppliers, GM said, echoing comments by other automakers.

“Alternatively, if prices are not increased and we opt to bear the burden of tariffs or plant moves, this could still lead to less investment, fewer jobs, and lower wages for our employees. The carry-on effect of less investment and a smaller workforce could delay breakthrough technologies and threaten U.S. leadership in the next generation of automotive technology,” GM said.

The automaker imports several models, such as the Buick Envision from China, as well as parts for assembly in the U.S. Most cars and light trucks built in America include about 30 percent foreign content, according to industry trade groups.

Several other automakers such as Toyota Motor Corp. and Mazda Motor Corp. have filed statements in recent days.

In its filing, Jaguar Land Rover expressed concern that its dealer network would suffer from tariffs.

“Immediately impacted for JLR would be our retail partners who are planning to invest over $1.3 billion over the next five years into facilities projects in their local communities. We would see these investments greatly reduced. Additionally, the 7,400 JLR employee base at retail would suffer immediate losses,” it said.

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